Good morning fellow Bitcoiners! We must admit that it was nice to wake up to a decent little rally up to retest resistance at 239 $, however once again the market has failed to break above a significant level. Over the long weekend, price was relatively muted other than a move lower back to the mid-230’s $ as the choppy, range bound action continues. The fact that price has spent so much time exploring the 230’s makes us think there are some large players in the sandbox at these levels.

As we have been maintaining for a few weeks now, we remain neutral on the bitcoin market as it has become untradeable. We must see a breakout from the current ranges, in either direction, before we will even think about taking a ProTrade in this environment. The technicals support this view with price still unable to get sustainably above the 50% Fib level on the daily chart below, but also doesn’t want to move below volume profile PoC. This makes sense seeing as though there is bullish institutional order block support at 235 $, and bearish IOB resistance at 243 $.

Additionally, moving average resistance and the Parabolic Sar lie right above the market between 241.12 $ and 243 $ on the weekly log chart of Finex (not shown), so if these levels can be broken on volume and held for at least 24 hours then we would expect a rally up to the next resistance level at 250 $. Conversely, If that range cannot break, then we have more sideways price action in store for the remainder of the short week.

Generally speaking, we will be waiting patiently for a tradable setup in either direction before breaking from our strict neutrality, but there are many levels of support or resistance that must be broken to make that happen. In fact, 262.45 $ must be broken to the upside before we can even think about potential bullish trend reversals, so until then we expect the current consolidative chop zone to continue.

We don’t really have anything to add to yesterday’s market update as price has been moving within a 2.00 $ range for the past 24 hours. We have never seen this level of inactivity, low volatility, or complacent sentiment in the bitcoin market in our 4 years in the crypto space. We are still on the fence about whether this is a good thing or a bad thing for the sustainability of bitcoin, but we can’t help but think that part of this has to do with the paralyzing effect the blocksize debate is having on the progress we as a community are achieving.

That being the case, we remain steadfast in our reticence to trade this market given the current circumstances. We want to stay neutral and watch for a breakout with plenty of dry powder we can use to strike when the time is right. Having said that, we get the distinct feeling that this summer will be characterized by a lack of opportunity as market participation dwindles through the coming months and focus remains on the legacy forex markets for the time being.

This is brutal. Again, we have nothing to add to the past few days’ updates as price absolutely refuses to move. Until the market makers decide to bust us out of this range we cannot make a substantial, sustainable move in either direction. This is a standoff, and it could last for some time. This is evident on the 240min chart below which shows no trend, just chop.

So what are the levels we are watching for a breakout confirmation? They are the same as they have been for months. We think a breakdown below 225 $ would be bearish while a breakout above 250 $ would portend higher prices in the near term, while medium term we would need to see 210.12 $ getting taken out on the downside or 262 $ on the upside to have a clear directional bias going forward.

We will have more details about our longer term view on bitcoin and alts in the Bitcoin BullBear and Crypto BullBear due out this evening (apologies for the delay on these, they are coming today!). Until then, stay neutral.

At this point, we wouldn’t buy bitcoin with someone else’s money. Following a weekend that saw the price trade down around the bottom of the recent range, the market has now decided to resolve to the downside as support around 226 $ was taken out on volume early this morning. Given that there is no breaking news and the US dollar Index is taking a breather, we think there is a very good probability that price will now retest the 210.12 $ low from earlier in the year. That will be a critical level as if it is broken price should move lower to test 200 $, but if it holds we will see a retest of the 235 $ confluence area.

From a broader perspective the market is still trading in a multi-month range between 210 and 260 $ as can be seen on the daily chart below. We do not expect this to persist for too much longer as the Bollinger Bands remain historically tight, unfortunately we suspect that support will be broken to the downside on the way back to the mid-100’s $ rather than resistance being taken out higher on the path above 260 $.

Other technical features to note are the volume profile PoC at 236 $ and SCMR dynamic resistance at 231 $, both of which are now strong overheard resistance. Additionally, Willy is bearish, accumulation has flatlined, and volume remains almost nonexistant. All in all, we think the bearish bias continues for the near term given that both technically and fundmentally bitcoin remains challenged with blocksize rancor and exchange impropriety (OKCoin most recently).

We need to see a stabilization of price around a key support level with bullish characteristics before consider long trades again. For the time being, however, bitcoin looks poised to go lower from here.

Following a brutal day for bitcoin bulls yesterday, the respite in the US dollar is giving some extra juice to a countertrend rally in the cryptocurrency today. Given that the key 220 $ level was breached momentarily during the selloff we are even more confident that a retest of 210.12 $ is inevitable at some point over the summer, and actually think 200 $ is the more important level to test. If these can hold, we can think about getting bullish. If not, we will most likely revisit the 166.45 $ low in short order.

That said, technically speaking we have some impetus for near term bullishness as the market got seriously oversold during the action yesterday and needs to move back into areas where there is sellside liquidity. The first target we are looking at is the 50% Fibonacci retracement level at 231 $, which is also where SCMR resistance is now building. Beyond that level, 236 $ is the OTE short sweet spot (ss) which also coincides with the filling of a volume profile notch all the way up to the point of control (PoC). If price can get back to the 234-236 $ area, we will be issuing a ProTrade on the short side with targets in the low 200’s $.

Bitcoin ProTrade: We are itching to issue a ProTrade on the short side, but the market is still not presenting profitable enough risk/reward setups at this time. However, we are watching the 231 and 235 $ level for indications of weakness.

Not another range!!! Unfortunately it appears that is what is materializing as price settles into the mid 220’s $ going into the latter half of the week. We think price will hold between the resistance levels we identified in yesterday’s price update, most likely 231 $, and support at the new 219.71 $ local low, at least through the end of this weekend. If either of these technically significant price areas are violated, then we can expect an acceleration in the direction of the the break. If this fails to occur then we are looking at yet another boring, rangy weekend in bitcoinland (as far as price goes).

Taking a longer term perspective, 200 $ remains the key support level. We continue to expect a retest of this level at some point during this summer, but are still not convinced as to whether it holds or breaks. Given the recent uncertainty both technically and fundamentally for bitcoin, we think its reasonable to expect a breakdown below that 200 area, at least on a spike lower. If 200 $ breaks but the 166 $ low holds the bulls could have a fighting chance for 2015. If both 200 and 166 $ are taken out on volume over the next few months, then we would be looking at sub-100 $ coins in very short order. We would be buying the heck of a drop like that as it would surely signal a capitulatory bottom during a time of extreme panic.

That said, more than likely the “consolidation from hell” (as many on Twitter are referring to it) marches on through the summer, slowly grinding lower to find support at historically important levels. Bitcoin is still in price discovery mode, which means trading opportunities will remain limited.

As expected, bitcoin prices are settling into another trading range (220 - 232 $) as volatility diminishes to historical lows yet again. We are still expecting this countertrend rally to continue up into the low 230’s $ prior to a retest of the 219.71 $ local low, but our suspicion is that if price action materializes as expected then 219.71 $ will most likely not hold and we will see that move down to 210 $ that we have been eyeing for quite some time now. That said, until we get some movement outside of the 220’s $, the market has our hands tied as far as trades due to poor risk/reward profiles from either side.

We want to revisit the daily chart (below) to show how tame price action has been even compared to just the beginning of the year. The interesting thing about this chart is that despite the fact that volume profile PoC broke and SCMR resistance has been steadily building at every significant overhead level, price still has not made a lower low off of the 166 $ low. Additionally, Willy is getting awfully close to stupid oversold and distribution seems to be waning. While these technical features may indicate some hidden bullishness in the market, the fact that trader sentiment has recovered since the drop last weekend and that Bitfinex longs remain near record highs tells us that another washout to lower levels is likely prior to any kind of sustainable rally.

As has been the case for a few weeks, we want to remain neutral on the market until we get more definitive clues as to which direction the market wants to move over the longer term.

Bitcoin ProTrade: We are itching to issue a ProTrade on the short side, but the market is still not presenting profitable enough risk/reward setups at this time. However, we are watching the 231 and 235 $ levels for indications of weakness.

Much to our chagrin bitcoin has indeed remained in a trading range between 219 and 231 $ much as we anticipated it would prior to the weekend. Despite that being the case, volatility did pick up slightly at some points over the past few days on moves that we can only assume were short covering spikes, but they were impossible to take advantage of as they were only split second price prints on the tape. While we are still expecting a more organic move to the upside to fill volume profile and the tail/wick that ran up to 230 $ on Saturday, we think this move will be the spring that washes weak shorts and subsequently commences the selloff that ultimately take us below the 219 $ local low.

As far as the technicals, the weekly and daily charts that we showed last week in the daily updates remain neutral and unchanged so far which tells us that patience remains THE virtue in the this market during the consolidation from hell.

On a shorter timeframe, such as the hourly chart shown below, we can easily see the short covering spikes that characterized the weekend trade, as well as the rangy price action that is aimlessly meandering in no particular direction at all. If we take a look at momentum we see that Willy is quickly approaching overbought territory, as is CM PPO, and price is nearing minor SCMR resistance at 227 $.

If that 227 $ level can be broken and held on volume for more than just a few moments, then our 231 $ target (the 50% Fibonacci level AND major SCMR resistance) would be in range. We will be looking to establish shorts around that area, and would recommend that longs take some chips off the table at that level as well. However, if momentum wanes at current levels and price begins to stall out then another run down to the bottom of the range around 220 $ would be the next move.

As the countertrend rally marches on, price has now briefly peeked above our 231 $ first stop target prior to pulling back to the 230 $ level. While we have been expecting a sharper correction in this area, it appears as though price wants to push at least a little bit higher to test the 234-238 $ resistance zone (much more technical significance).

Getting to the chart, we can see that price tagged the 50% Fibonacci level at 231 $ that we identified last week, and is now pulling back off of those spike candles. Despite hitting our initial upside target, price action seems to be holding in nicely above 230 $, which tells us that there could be some continued strength in the market through the end of the work week. If price can break back above the new 232.07 $ local high and hold there for at least a couple of hours, then we think it likely that we move slightly higher up into the true OTE short zone from 234 to 238 $. This area also happens to be where a large volume profile notch lies, in addition to the fact that another push higher will take the momentum indicators well into extremely overbought territory. We think we can be sellers there.

If, on the other hand, price cannot sustain current levels and begins to slide below 230 $, then the week long trading range bitcoin has been in will persist for a few more days at the very least. More specifically, we would expect yet another test of the key 220 $ area if this scenario materializes. If we begin to see this occurring, we will have confirmation of a sell signal and will issue a ProTrade at that time. More likely than not, however, price remains strong up to OTE resistance which will be the better location for a trade from the short side.

For the long term bulls, price still must break above heavy resistance levels at 242, 250, and 262 $ on heavy volume, and each level must hold for at least 24 hours. Given that the market remains in a distinct MT downtrend the bulls have much more to prove than the bears, which is why we are keeping a slight negative bias for the time being.

No changes to our short, intermediate, or long term forecasts for bitcoin at this time. The price, still stuck around 230 $, has moved less than $3 since yesterday’s update, and remains firmly entrenched in this new consolidative range. We are still expecting a move higher to tag the 236 $ area prior to a more substantial selloff to retest critical levels between 200 and 220 $. While we think this move will materialize in the not too distant future, we have a feeling that price will remain subdued within the range through the bulk of the weekend.

That said, we will be watching for a slight increase in volatility starting Sunday afternoon as the foreign exchange markets anticipate the US Fed meeting early next week. We should be able to glean some insight into what the US dollar will be doing at that time which will positively inform our short term outlook for bitcoin. Stronger dollar means weaker bitcoin, and a weaker dollar could give us the push to 236 $ we have been looking for.

No need for a new chart today as the 4hour from yesterday’s update remains representative of current market conditions. We are still watching for sell signals if/when price reaches the 236 $ level, however if the local 227.48 $ low cannot hold though the weekend then we expect to see 220 $ tested yet again.

Bitcoin prices continue to rally despite a highly unfavorable technical landscape over the short to medium term. We can’t help but think that a large portion of these incoming funds are buying coins in anticipation of a Greek exit from the Euro Zone (“Grexit”), or at the very least tight capital controls and potential bank runs in Southern Europe. While this is a perfectly legitimate reason for a rally, and is an example of one of the more compelling use cases for bitcoin, these types of scenarios almost always end with a “buy the rumor, sell the news” type of climax that catches most players offsides.

Besides the Euro drama, it also appears as though Google search trends for bitcoin and blockchain are increasing substantially in spite of the fact that the media coverage of cryptocurrency continues to be skeptical at best. While we think a true breakout rally above the 250 to 260 $ key intermediate term resistance range is unwarranted and unlikely due to the current block size controversy and extreme buyside leverage on Bitfinex, however we cannot rule it out as a possibility given the exogenous macro environment.

Technically speaking, things look overbought and ripe for a pullback, but they have looked that way for the past three days. That said, if we take a look at the 4hour chart below we can see that price is now in an even juicier short zone than it was on the hourly chart from yesterday. We have a stupid overbought Willy, divergent A/D and volumes, price is right at the 70.5% Fibonacci level (OTE short sweet spot), and the larger bull AB=CD has completed (overshot, in fact).

At this point, we feel good about staying in the (NEW) short ProTrade that was issued yesterday given our stop at 242 $ was missed by $0.01 and price has subsequently pulled back down slightly below 240 $. We will now move our stop to the top of the OTE short zone (79% Fib) at 243 $, as if this is taken out prior to a retest of support around 230 $ then we will take the loss as prices rise to the 250 $ resistance level. If that get taken out, we may be in a LT reversal, but it is still too early for that kind of talk. One thing at a time…

While it is never a pleasant thing to admit when you are undeniably wrong about something, at least we can take some solace in the fact that we kept our losses small relative to how this rally has materialized. Although we are still unsure about what is causing the buying frenzy, whether it be Greece, short covering, or real institutional demand, we are sure that price is now at the most important technical resistance level in months.

Following a brief pause around the 250 $ area yesterday, the market bought the dip aggressively which led to the overnight rally which we are now pulling back from. As we have been saying for months, the bear market/consolidation will not be over until 262 $ in taken out on volume and holds, followed by a break of the 300 to 320 $ range which is where the bear would officially be slayed. We are not ready to make that call yet seeing as how the technicals are extremely overbought in the short and medium term, however the longer term charts still look constructive as the double bottom around 220 $ ended up holding firm.

At this point we want to let the market tell us what it wants to do. If we see a legitimate break above the 262 $ level on a volume spike, then we will be looking for places to get long once that breakout pulls back to support. If the bulls cannot muster the strength to penetrate these key resistance levels, however, then we see a more substantial pullback coming as the market returns to the price from which it came (in this case that price is ~230 $). Having said all that, bitcoin is still stuck in an intermediate term range between 210 and 260 $ so we will be hesitant to trade until we see clear signs that the range has been broken.

Another thing to keep in mind if you are trading today is that the FOMC statement will be released at 2pm EST, which will inject some volatility into the currency and commodity markets (bitcoin included). A hawkish statement would boost the US dollar and would put pressure on bitcoin to move back down to support, while a dovish statement would push the dollar lower and keep bitcoin prices elevated.

Now, whether that life takes the form of a rally continuation up to key resistance levels
or it materializes as an opportunity to sell coins at the top of the still intact trading
range between 210 and 260 $, remains to be seen. However, the longer term charts
are saying that a bigger move is on its way, and perhaps it will be to the upside.
Having said that, and before folks run out and mortgage the house to leverage buy
coins, we think that the pause we are currently seeing could have more room to the
downside as the large gains by the bulls over the past few days are consolidated. If
the market can slide lower to the 240 $ area and hold there, then we think 262 $
has a realistic shot at being taken out and we head higher. On the other hand, if
240 $ does not hold on the selloff, then a retest of 230 $ would be in the cards.
The final scenario is that Greece leaves the Euro over the weekend, or at least
implements capital controls, and bitcoin prices skyrocket to the 300 $ heavy resistance
area. While we do not think this is likely, we do think it is possible (~30% prob).
Given the number of possible impactful events regarding bitcoin’s price that are
coming over the weekend, and the uncertainty which is present globally over Greece,
we want to remain neutral and keep our powder dry for the real move, whether
that be up or down. For now, we want to see how the geopolitics play out…

Chop, chop, chop goes the market maker wood chipper as both bulls and bears have been mulched over the past few days. Although range bound markets are the most frustrating of trading conditions, It now appears as though the short term technicals are back in control (a very good thing). This tells us that the market is likely finding a new, higher equilibrium price which would indicate another leg to the upside once the current consolidation has run its course. We are now there yet, however, as the 240 $ to 250 $ range is now firmly established.

Technically speaking there are some interesting things happening concurrently. First, and most immediately relevant, is that this rally off of the 240 $ low is getting overbought quickly as it approaches both an institutional supply area (orange rectangle) as well as the OTE short zone (red rectangle) off this entire corrective move. Next is that sell volume has been surprisingly low as A/D begins to show a pick up in accumulation. Again, bullish. Lastly, The recent move up to 259 $ ripped through our OTE short sweet spot like tin foil, but where it did stop is even more intriguing. Almost to the penny, the top of the rally was right at the 161.8% Fibonacci extension level, only slightly wicking above that level in a blow off, parabolic top.

This final point is the one we think has the most potential for long term implications. The type of move bitcoin just had was eerily reminiscent of the ones we see on a daily basis in the legacy foreign exchange markets. Sharp spikes higher that ignore overbought/oversold indicators and stop on a dime at institutional take profit (TP) fx levels like the 161.8%, indicate that more and more institutional money is slowing leaking into bitcoin. This is just one of many signals we have noticed that point to smart money flows finding their way into bitcoin, but this is simply the most recent example.

More to come, and perhaps a ProTrade, if we can get past 250 $ again and hold. Until then, steer clear of the woodchipper.

Paralysis has once again gripped the bitcoin market as prices have failed to move out of our pre-identified range. Despite a spike selloff down to the 239 $ level on decent volume, the bears could not hold price down there for even a entire hour. By the same token, once the false breakdown was confirmed and price was able to recapture the 240 $ level, the bulls failed to push price back up to resistance around 248 $. Seems to be a loss by both sides, meaning a continuation of the range until we get a more substantive move.

Technically speaking we have some interesting things happening on the weekly chart that could influence where we head over the next few weeks to a month. First of all, we can see that price remains in the descending wedge, but is right at the very top of the formation. This also happens to be right where historical horizontal resistance comes in from the April '13 bubble top at 259 $, and is the local top from the recent parabolic rally we had. If that 259 to 262 $ resistance area can be broken on volume and hold the top of the wedge on a test, then we truly may be looking at a multi-month trend change. Until then, the range rules.

Second thing to notice is that two weeks ago SCMR Trends painted a blue candle (potential reversal), then last week it painted a bullseye (confirmed reversal), and this week we have an “X” (confirmed reversal rejected). It sounds confusing, but bottom line is that if we still have an “X” painted over this week’s candle by Sunday evening, then we could be looking at a failed breakout. This would mean a retest of lower levels is coming, most likely down to the 225 to 230 $ support range.

The last features of the chart we want to point out are the indicators, which are relatively bullish for the most part. We have a Willy that is still well below -50 but is moving out of oversold territory, a stochastic that is showing bullish momentum, and an A/D that has flatlined during this extended consolidation. Additionally we have a firmly bullish Parabolic Sar adding support around the 220 $ level, however SCMR 6month and 1year resistance still lies at 320 $ which is where the real battle will be fought (if we can get there).

All in all, we are maintaining our neutral stance with a slight intermediate term bullish bias. That said, the impotence of the bulls over the past 48 hours has turned us somewhat more negative on the very near term as perhaps another bear attack in necessary to scare the bulls out of their complacency. Again, watch the current range of 239 $ to 252 $ as if this remains intact, then price will stay rangebound. However, if 239 $ is broken on volume and fails to bounce quickly, then we think its reasonable to expect a small pullback to the first support area from 225 to 230 $ over the next 7 to 10 days. After that, and if 220 $ can ultimately hold, then we think the chances for a much more substantial rally up to the 300 $ area is completely realistic.

What has occurred over the weekend in the price of bitcoin should come as no surprise to our readers. While we were expecting the price to remain within the 239 to 252 $ trading range with a bullish bias towards the top of the range, headlines out of Europe (Greece and Germany) were able to create some FOMO which pushed the rally up to intermediate term resistance around the 260 $ area. Until the 256 and 259 $ local highs are broken, and 262 $ is taken out on volume, then bitcoin will remain rangebound and choppy. However, given the longer term technical setup there could be significantly more upside in the near future IF these levels can be broken in the near term.

Getting to the technicals, we want to take a look at two charts which tell the medium and long term stories well. First up is the daily chart, which is now entering a strong resistance zone. The yellow area we have highlighted on the chart represents the OTE short zone off the of 155 to 315 $ rally early in the year, as well as a bearish order block and the 200day MA. The indicators are also mixed with Willy getting near overbought, ergotics exhibiting a small bearish divergence, and A/D showing a continuation of the accumulation of coins. Putting all of this together tells us that getting through the 256, 259, and 262 $ resistance levels will be tough in the very near term, and in fact price will still be well within a strong sell zone until the 280 $ area is tested and broken. The next few weeks will be critical in determining whether we are undergoing a true trend change or just a countertrend bounce.

Next up is the weekly chart, which we referenced directly in last Friday’s update. We can see that the weekend rally allowed price to get high enough to keep the confirmed reversal intact (no more “X” above last weeks candle), which is a very bullish sign. Adding to the bullishness is the fact that, for the first time in well over a year, price is now above the descending wedge with plenty of room to run to the upside according to the momentum and volume indicators. If the bulls can hold current levels for long enough to clean up the short term indicators, then we have little doubt that the 259 to 262 $ resistance zone will at least be tested over the course of this week.

Overall, the price action over the past few weeks has reaffirmed our generally bullish bias, but has yet to move far enough in either direction to force us from our neutral positioning (hence no ProTrade yet). Presently, we are still within a wider trading range between 220 and 260 $ so we want to keep our powder dry. In fact, if the bulls cannot muster the strength to breakout of this range in the next 7-10 days, then a retest of the bottom of this range would become the preferred scenario. Until then, we will continue to stay patient as the market consolidates recent gains.